It’s important to understand the levers and opportunities on both the assets and liabilities to help yield the greatest return on your investment and manage risk as you move towards your defined benefit destination. Talk to us today.
Investment strategies today are more complex and dynamic than ever. With regulatory and legislative changes, market volatility and political uncertainty, you may be looking at a wide range of opportunities across the pension balance sheet to potentially increase returns, minimise risk and manage remaining risks.
A key step in helping defined benefit (DB) plans meet their final obligations and funding objectives is to look at growth in assets relative to liabilities.
Our investment team examines all asset classes and market/return drivers to create an optimal strategic plan to meet growth objectives with an appropriate risk profile.
Our experience and knowledge of the market allow us to construct customised strategic asset allocation with a portfolio of managers and funds appropriate to your needs.
We’re here to help. Complete the “Connect with us” form today and we will be in touch with you to discuss how we can help you with your investment strategy.
Our investment solutions are designed in a way that allows you to pass on or “delegate” some or all of your investment decisions to Mercer. Our specialist investment managers develop customised strategic allocation advice and provide continuous governance and portfolio oversight.
Acting as an extension of your in-house investment team, we offer the option to execute your own investment thinking on our regulated, scalable infrastructure, releasing valuable resources to concentrate on investment strategy rather than the day-to-day functional aspects of investment management.
With ongoing benefit accrual, the investment strategy at this stage is to maximise long-term growth.
Acting as an extension of your in-house investments team, we will provide guidance on the right risk level and balance between risk and return and then implement the plan. The strategic asset allocation will involve asset liability modelling and look at not just risk and return but also at the impact on expected cash flow, balance sheet and funding. Your plan’s portfolio will broadly consist of a diversified growth portfolio and fixed income instruments designed to hedge long-term liabilities.
With benefit accrual frozen, the focus at this stage is on improving the funding level and reducing volatility.
We will monitor a daily feed of both asset and liability values, making the information accessible to committees and with quarterly performance reports. Given the growing prevalence of risk management and funding-level triggers, these capabilities are not “nice-to-haves” but requirements.
The goal here is to exit from the pension business, with a focus on liability-reduction exercises.
We have extensive experience in this area. We can assist with managing liquidity to meet large divestments, implementing a strategy to hedge a potential risk transfer or reduce frictional trading costs in paying an annuity premium, or managing the post-deal investment strategy.
For UK and Ireland institutional investors only, Mercer Investment Exchange® allows you to quickly implement investment decisions — at low cost. It offers institutional investors global scale and buying power, innovative investment strategies and discounted fees.
Backed up by our extensive investment capabilities, Mercer Investment Exchange® embodies our revolutionary thinking, allowing investors to unlock the latest, smartest investment management strategies and solutions.
Key benefits
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Diversifying your portfolio is the one principle every professional investor agrees on. We believe it is important to maintain a meaningful allocation to a diversified portfolio of alternative assets.
Alternative assets are the best way of safeguarding portfolios against the risk of equities and bonds both performing poorly at the same time. They provide a solid opportunity to guard against the volatility of equities, hedge against inflation and potentially achieve better returns. Hedge funds can provide a great way to diversify out of equities without sacrificing returns — and private equity could attain a significantly higher rate of return than publicly traded equities. Further, real assets, such as infrastructure and real estate, can provide elements of both as well as a measure of protection against inflation.
We have been researching, advising on and executing alternative investments for more than two decades. We help clients identify the appropriate fund managers based on their risk/reward requirements, and we have significant experience helping clients construct a suitable portfolio that meets their needs.
Our global footprint allows us to closely follow the complex and dynamic alternatives market. Currently, we’re tracking more than 2,000 different alternative investments across the world.
Although we focus on providing research, guidance and execution of an alternative investment strategy, that’s just one part of our larger investments business. We have the capability to work with clients to put together a holistic plan — one that seeks to reduce risk while enhancing returns.
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As more plan sponsors look to self-insure their obligations, we believe that hibernation investing will begin to dominate the pension investment landscape.
This involves putting plans in a steady state while winding them down over time or gradually preparing for pension risk transfer over a longer period of time.
Hibernation investing brings its own set of challenges and risk-management opportunities; however, success comes when seeing this as a tailored investment strategy within a broader self-insurance framework.
The goal is a low-risk, balanced outcome for asset and liability management — and to stay aligned in a way that seeks to minimise costs, volatility and capital commitments. If your DB plan is entering a hibernation period, here are four key priorities:
We’d be happy to set up a free consultation or send you more information to get you started. Simply fill out the form below and we will be in touch. If you are an existing Mercer plan member and have a question about your pension or shares, please contact the JustAsk team via this link.
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